Getting to grips with funding your business can be in itself, well, a tricky business! There’s so much advice and content out there for you to wade through, isn’t there? Sometimes though, you just need straightforward information to save time. You’re already busy, so I thought I would write a quick and handy guide to Director’s Loan.

First of all, what is a Director’s Loan?

Well - A Director’s Loan is when you (or other close family members) get money from your company that isn’t a salary, dividend or expense repayment. It’s really important that you remember to keep a record of anything you borrow from, or pay into the business, and those records are known as the “Director’s Loan Account”.

How does a Director’s Loan impact your accounting?

At the end of the financial year, you’ll need to provide a “balance sheet” in the annual accounts summary. This will include any money that you owe the company or that the company owes you.

Here’s something to bear in mind - you may have to pay tax on a director’s loan. Your company may also have to pay tax if you’re a shareholder (sometimes called a ‘participator’) as well as a director. It’s important to double check with your bookkeeper or accountant.

Will this impact your personal and company tax responsibilities?

In short, the answer is yes. But there is, of course, a lot more to it than that. Sorry!

First, you need to have an understanding of the status on your Director’s Loan account. This will then have a big impact on those responsibilities. If the account is overdrawn, you owe the company. If the account is in credit, the company owes you.

If the former is the case, you or your company may have to pay tax if you take a Director’s Loan. Depending on how the loan is settled, you might need to check the extra tax responsibilities associated if:

• the loan was more than £10,000 (£5,000 in 2013 to 14)
• you paid your company interest on the loan below the official rate

 You repay the loan within 9 months of the end of your Corporation Tax accounting period

Where do you need to start?

When preparing your Company Tax Return, you should use form CT600A, showing the amount owed at the end of the accounting period. In order to complete the form properly, it’s worth having these things in mind;

• If the loan was more than £5,000 (and you took another loan of £5,000 or more up to 30 days before or after you repaid it) pay Corporation Tax at 33.75% of the original loan, or 32.5% if the loan was made before 6 April 2022. After you permanently repay the original loan, you can reclaim the Corporation Tax - but not interest
• If the loan was more than £15,000 (and you arranged another loan when you repaid it) pay Corporation Tax at 33.75% of the original loan, or 32.5% if the loan was made before 6 April 2022. After you permanently repay the original loan, you can reclaim the Corporation Tax - but not interest
• Corporation Tax is paid at 33.75% of the outstanding amount, or 32.5% if the loan was made before 6 April 2022
• Interest on this Corporation Tax will be added until the Corporation Tax is paid or the loan is repaid
• You can reclaim the Corporation Tax - but not interest

When you receive a Director’s Loan, there are no personal responsibilities associated with its repayment. That is to say that if the company should go into liquidation at any point whilst the loan is outstanding, the loan is “written off” or “released” and not “repaid”. However, be mindful that income tax is payable on the loan you receive through your Self Assessment Tax Return.

Just before I go…

I know there’s been a lot to take in, but I couldn’t leave these last few points out.

If the Director’s Loan was more than £10,000 (£5,000 in 2013-14)

If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must:

• treat the loan as a ‘benefit in kind’
• deduct Class 1 National Insurance

You must report the loan on a personal Self Assessment tax return, meaning that you may have to pay tax on the loan at the official rate of interest.

If you paid interest below the official rate

As a shareholder and director, your company must:

• record interest you pay below the official rate as company income
• treat the discounted interest as a ‘benefit in kind’
• You must report the interest on a personal Self Assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.

Can you reclaim Corporation Tax on the loan?

Your company can reclaim the Corporation Tax it pays on a director’s loan that’s been repaid, written off or released, but you cannot reclaim any interest paid on the Corporation Tax.

A claim could be made after the relief is due - this is around 9 months and 1 day after the end of the Corporation Tax accounting period when the loan was repaid, written off or released. You will not be repaid before this.

You must claim within 4 years (or 6 years if the loan was repaid on or before 31 March 2010).

 Reclaiming within 2 years

If you’re reclaiming within 2 years of the end of the accounting period when the loan was taken out, you should use form CT600A to make a claim when you prepare a Company Tax Return for that accounting period (or amend it online).

Use form L2P with your Company Tax Return instead if either:

•  your tax return is for a different accounting period than the one when the loan was taken out
• you’re amending your tax return in writing

It’s really important that you tell HMRC how you want the repayment in your Company Tax Return.

If you were to consider reclaiming after 2 years…

You’ll need to fill in form L2P and either include it with your latest Company Tax Return or post it separately.

 HMRC will repay your company by either:

• using the details you gave in your latest Company Tax Return
• sending a cheque to your company’s registered office address

I promise we’re almost there!

Here’s a few quick fire points to remember:

If you lend your company money

Your company does not pay Corporation Tax on money you lend it.

 If you charge interest

Interest you charge your company on a loan counts as both:

• a business expense for your company
• personal income for you
• You must report the income on a personal Self Assessment tax return.

Your company must:

• pay you the interest less Income Tax at the basic rate of 20%
• report and pay the Income Tax every quarter using form CT61

What if you need more information regarding the interest?

You can request form CT61 online or call HM Revenue and Customs.

HMRC Shipley Accounts Office 0300 051 8371
 Monday to Thursday, 9am to 4.30pm
 Friday 9am to 4pm

Looking for more helpful and handy tips to make your money go further?

Take a look at our previous newsletters, or get in touch for personalised advice on keeping royal control over your business finances.

Feel free to get in touch.

Website https://www.queenaccountancy.com

Phone  01539 482007

LinkedIn

I read an article the other day all about colour, which I found interesting, but slightly against what I believe. The article was saying that you had to choose the colours of your website and business cards to address what your clients want and not around your favourite colours. I agree with this to a point but...

Let's see if I can explain

Colour is so many things to so many people, it can evoke feelings, memories and even treat our physical or mental health.

Colours are vitamins, they spark in us something and that same colour to someone else it will spark something in them!

But every colour, like everything else has a positive and a negative.

Each colour has its own meanings...

RED - choose for occasions when you want to be recognized , or to catch some ones eye. To project authority without being threatening use red as an accent or in moderation'
Positive - Up-beat, confident, assertive, exciting.
Negative - Aggressive, domineering, bossy, threatening, danger.

PINK - Can be used to soften an austere business look.
Positive - Feminine, gentle, accessible, not-threatening.
Negative - Pathetic, unimportant, safe, under-confident.

BROWN - To get people to open-up and communicate more freely, the least threatening colour than others - perhaps that's why it's chosen by monks?
Positive - Earthy, homely.
Negative - Safe, boring, unsophisticated.

YELLOW - To cheer yourself up, particularly on a dreary day.
Positive - Cheerful, hopeful, active, uninhibited.
Negative - Impulsive, tiresome, whirlwind, volatile.

BLUE - The deepest blues project the most authority - think police. IF you want to look like you're in charge a navy or deep blue suit will do the trick.
Positive - Peaceful, trustworthy, constant, orderly.
Negative - 'Holier than thou'.

GREEN - When over-stressed and overtired green produces restorative results. (my tip of the day is to choose a grass green handbag for yourself or a present. Look outside - grass makes everything and anything look better!)
Positive - self- reliant, tenacious, nurturing, dependable.
Negative - boring, stubborn, risk averse, predictable.

ORANGE - Wear in measured doses in a business environment ( have to say it's my fav!)
Positive - vitality, fun, enthusiasm, sociability, uninhibited.
Negative - Superficial, common, faddist, giddy.

VIOLET - In business situations where you need to project confidence and individuality.
Positive: Imaginative, sensitive, intuitive, unusual, unselfish,
Negative - weird, impractical, immature, superior.

GREY - In business, greys are the safest option for suits. Less authoritarian than navy or black.
Positive - Respectable, neutral, balanced.
Negative - non-committal, deceptive, uncertain, safe.

BLACK - a sign of respect and to keep people at a distance.
Positive - formal, sophisticated, mysterious, strong.
Negative - mournful, aloof, negative, lifeless.

WHITE - a strong associations with traditional medicine so impeccable standards of care and hygiene.
Positive - pure, clean, fresh, futuristic.
Negative - clinical, colourless, cold, neutral.

Now we know the above, it makes super sense to choose a colour that will attract your clients, or does it?

You have lots of different clients (maybe only one avatar and you could choose his/her colour but...)

There is only one you and you are unique.

During your personal brand journey you should learn exactly which colours are 'You'

Take this as a great start and then you look at your colours and decide which one of those is suitable for your clients, or gives out the desired message.

Above there is only 11 colours not much to choose from and the probability is, that every healer will choose violet! But this is where your colours come in, it's the shade or tone of that colour that must be very much YOU!

If you plaster your website in let us say a generic green and the same with your business cards and your social media posts, alongside pictures of you and those colours do not suit you - believe me, you will not look as good as you should and I would go as far as to say you will look, older, unhealthier and just not you.

If you're struggling then this is one of the subjects I cover in great detail along with hundreds of others in my VIP Brand Accelerate Programme

https://www.sallyinkster.com/vip

Love and Laughter

Sally Inkster

🙋‍♀️ Are you at the point of a big personal or professional step and feel super excited – but at the same time worry what others might think or if you can pull it off?

Then I’d love to interview you in the last round of market research for my coaching business!

I have already learned SO much from my first round (THANK YOU all of you who participated) and now I’d specifically love to talk to you who want to make changes in your life BUT:

- Compare yourself against others, concerned you don’t have what it takes 
- Keep procrastinating or avoiding taking the next step
- Lack the mental energy to get started

Does this sound like you? Comment or send me a Message!

It’s a 30 min call, for my eyes and ears only, and I promise it will awaken a lot of insights in you as well. 💡

(If this isn’t you, you can also help by sharing this post to spread the word 😊)

It is commonly known that getting enough sleep is a vital part of maintaining or improving our health, both physical and mental.  However, there can be so many barriers to sleep in the forms of insomnia and other sleep disorders, and they are extremely challenging for those who are suffering the sleep problem, along with anyone who shares a bedroom with them.

What I intend to do is to offer some brief insight into insomnia and how hypnotherapy can help.  I won't discuss sleep disorders here as I refer those on, but I can deal with sleep-talking should anyone (adult) be struggling with that.

Regarding insomnia, statistics show that 30% of adults complain of insomnia and for 30% of these adults it is a chronic problem.

There are three kinds of insomnia and there are different experiences that insomniacs have.  Alongside these, there are a wealth of different causes.

Insomnia that is temporary and fleeting, such as in response to jet lag, bereavement, stress is called transient.

That which is related to other disorders such as depression or pain or the menopause, is called secondary.

Primary insomnia is the kind that has no known origin and is not directly related to other medical problems.

How it shows up could be that the person struggles to fall asleep, or they're waking far too early, or they're falling asleep but then waking in the night and finding it difficult to return to sleep.  Hypnotherapy is useful for all of these bed-time challenges.

Usually using behavioural approaches which address unwanted habits and behaviours, and cognitive approaches which take on unwanted thoughts and beliefs, hypnotherapy for relieving insomnia is extremely rewarding.  The process is interesting and relaxing.  Having ensured there are no medical or psychiatric reasons for the insomnia that need a referral to a G.P., and that it is safe to conduct hypnotherapy, and having learned all I can about the client's challenges then a relaxing and rewarding hypnotherapy session follows, working on relieving any stress or anxiety, particularly that that is related directly to the sleep problems, followed by reframing any unwanted behaviours and thoughts while in the hypnotic state.
When the session ends and the client is fully alert, they find themselves already feeling a lot calmer and at peace, and eager to experience an improved bedtime.

However, as a well-qualified hypnotherapist, I have been trained and choose to deliver not only hypnotherapy, but also to offer good lifestyle advice about many, if not all, of the conditions I work with.  

In relation to sleep, it can be interesting to learn what different people consider to good sleep hygiene, versus what actually is.

Where insomnia is involved, some very simple life style advice is to ensure where possible that: 

~ there is good air circulation in your sleeping area  

~ you're using natural fibres in your bedding if you're prone to over-heating

~ you're seriously reducing or better still completely eliminating screens from your 

~ sleeping area 

~ strenuous exercise activity (except for sex which is excellent for sleep) isn't occurring right before bedtime

~ only very small and healthy snacks are eaten rather than large meals right before bed, ~DO NOT try to force yourself to fall asleep!  The law of reversed effect will take hold and you will not be able to do it!  Far better to employ one or two of a variety of relaxing and sleep-inducing techniques, than to do this!  If all else is failing, get up and do something tedious (not reading or TV or podcast) until tired enough to go back to bed.

My wish for you is that you sleep well tonight, and if an adult you know is really struggling with sleep, maybe you'll consider connecting them with me. 

Sweet Dreams! 

 

*Image Canva April 2024